How to Successfully Use Credit

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In my 100+ one-on-one counseling/coaching sessions with clients, I’ve worked with many people who are downright scared to use their credit cards. They’ve heard all the horror stories (and probably seen plenty) of those up to their necks in credit card debt. And the truth is, they are understandably concerned. Especially considering the all-time high that household debt recently hit (which I discussed in my recent post The #1 Budget Killer...). Debt management is clearly a challenge for many people. However, I always explain to clients that you DON’T have to rack up debt when you use credit. You just DON’T!

I tell them that I use my credit cards for almost everything and never pay a penny in interest. And I have NO credit card debt. Plus, my credit score is excellent. How is this possible? Let me explain…

1)      Pay balances in full each month

Avoid paying interest by keeping a zero balance and increase your credit score with an excellent payment history.

2)      Pay before the statement runs

Yes, you can do this! You don’t have to wait for the credit card company to generate a statement. Once the purchase posts, you can go ahead and pay it (in full).

3)      Use credit cards for monthly staple items

Use your cards for items you need to purchase no matter what - like groceries – and normally pay for with cash. Many credit cards offer points or other rewards which you can earn by using your card. And you can avoid credit lines being closed due to inactivity, by using them regularly.

4)      Set up recurring payments for fixed monthly expenses

For example, cell phone, cable or utility bills. This is advice I give to clients who don't want to deal with remembering to use their credit card. Set it up, and forget about it! Then just pay your credit card bill once per month and you're all set.

By following these 4 tips consistently, you’ll be on the road to successfully utilizing the many benefits that credit cards offer you. And isn’t that why you got them in the first place? Make them work for you, and not against you.

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